1 point In a product liability setting, the firm producing the product is the principal, and the consumer consuming the product is the agent. True False 1 point Which of the following will maximize utility for a risk-averse manager? 10% chance of receiving $200,000 and 90% chance of receiving $30,000 50% chance of receiving $25,000 and 50% chance of receiving $75,000 Receiving $50,000 with certainty 1 point When examining the relationship between utility and wealth: Low effort will always lead to higher utility, even for different levels of wealth For the same level of wealth, high effort will lead to higher utility than low effort For the same level of wealth, low effort will lead to higher utility than high effort High effort will always lead to higher utility, even for different levels of wealth When revenue involves some risk, then there is no portion of revenue that depends on effort True False When there is risk involved in the manager's payout (compensation), they will not have any disutility from additional effort. True False If the marginal cost to product safety, s, is 1 (MC = 1) and the marginal benefit is 2%,What is the optimal level of 7 v Type your answer... 1 point Arisk-averse manager will prefer a steady income with certainty over the same expected income with uncertainty. True False Adverse selection is a byproduct of: Individuals making incorrect decisions/selections The negative effects of firms trying to maximize profits Asymmetric information